It’s been a big week for the Federal Trade Commission. A court on Monday dismissed the agency’s antitrust complaint against Facebook and told it to come back with a stronger argument. Lina Khan chaired her first meeting as the new FTC chief on Thursday and began making changes from the start, expanding the agency’s antitrust powers.
Khan is famous for his antitrust arguments against Amazon, but she also wrote about the role privacy concerns could play in trying to regulate big tech companies like Facebook. I spoke with Issie Lapowsky, a senior reporter for Protocol, who dug into that part of Khan’s story, in particular a 2019 article she co-wrote on the idea of “information trustees”. The following is an edited transcript of our conversation.
Issie Lapowsky: The idea was basically that any business has a fiduciary duty to its shareholders. So a lot of privacy folks ask, “Well, why don’t they have a fiduciary duty to us? And that’s an idea that was really emerging in privacy circles. Lina Khan, more or less, tore it up. In that article, she basically said that the very business model that a lot of these businesses are built upon, which is personalized advertising, is totally incompatible with being an information trustee – with protecting life. private people first. So that was a pretty scathing criticism of this business model that is so fundamental to the Internet.
Kimberly Adams: And she gave a pretty interesting metaphor for how it would work.
Lapowsky: She did it. I really liked this part of the paper. And I should note that she co-wrote the article with David Pozen. Basically they wrote, imagine you go to the doctor, and let’s just call this doctor, for the sake of argument, Dr. Zuckerberg. Imagine that instead of paying Dr Zuckerberg for their services, Dr Zuckerberg is paid by advertisers who, the second you walk in the door, are running ads for the pills and procedures you might want to get. And all of these advertisements are based on the information Dr. Zuckerberg collects about you. And they write, could such a model really be considered consistent with respecting your health? If not, could such a model really be considered consistent with respecting your privacy? And the answer is no. This is how Facebook makes their money, and no matter what commitments they make, they always put money first.
Adams: So, what happened to this idea that had grown so much after the publication of this article?
Lapowsky: I think that changed my mind a lot. I think people who saw this as an important contribution – the idea of an information trustee – started to rethink it and wonder how it would really work because a lot of these big tech companies that are targeted by these laws, like Facebook, are incorporated into Delaware. And in Delaware, they already have certain legal obligations to their shareholders. So now you are bringing in a new legal obligation which is in direct conflict with the one that already exists, and which only creates a really messy and fundamentally untenable situation. So I think it changed a lot of mind. There were laws in New York that included this idea. They don’t do it anymore. We don’t have a federal privacy law, but there are a number of states that are introducing privacy laws, and it hasn’t been as successful as you would have. might have thought so.
Adams: Given Lina Khan’s perspective on competition and privacy, or at least what we know, what kind of power does she have now to potentially apply some of these arguments to what’s going on in the world? technology now?
Lapowsky: So there are several ways. I think we first need to establish that his perspective on privacy is an integral part of his perspective on competition. And as a little digression, the reason she’s become so well known in the antitrust world is that she really pushed forward the idea that the only way to hurt consumers isn’t just pricing. For a long time, the federal government looked at a monopoly of a company which resulted in higher prices and [whether] it hurts consumers. She basically argued that many of the bigger monopolies are currently offering even cheaper prices or free services to consumers, but causing further harm to consumers, and privacy is just one of them. them. So it goes part and parcel. Facebook is a free service because, according to it, it violates people’s privacy in many ways. So it’s important to recognize that I think a lot of his antitrust enforcement actions will address a lot of his privacy concerns.
But the FTC doesn’t just oversee antitrust laws. It also monitors deceptive practices. One of the biggest recent tech cases that we’ve seen the FTC bring was against Facebook. They made a consent decree with Facebook years ago, saying Facebook had not been upfront with consumers about how their data was being used and that it was misleading. Then, years later, through the Cambridge Analytica scandal, Facebook ended up violating that consent decree and reached a $ 5 billion settlement with the FTC. The FTC could continue to sue when it finds companies to be misleading about their use of user data. Which obviously, we’ve looked at these really labyrinthine privacy policies that companies post and sometimes find that actual actions don’t live up to the promises they make. And then there are things like rule making. The FTC hasn’t been super aggressive about making rules in this space, but they sure could be. They could adopt some sort of rule that says, “You have to do X, Y, Z regarding user privacy. “
Related Links: More information from Kimberly Adams
Here is Issie’s article watching this and that Harvard Law Journal Article she spoke. The edge has a good article about Khan’s first meeting as FTC chairman, which was broadcast live during the agency’s first open business meeting in two decades. In addition to rolling back a Rule of the administration of Barack Obama Restricting enforcement of the agency’s antitrust laws, the committee voted 3-2 to streamline FTC investigations going forward.
Ars Technica has an article about Amazon’s attempt to try and literally keep Khan out of business. Since Khan is used to criticizing the company, this says that in no way can it be impartial. But that track record is probably the reason she was hired in the first place. And if you miss Molly Wood, she unwraps that Facebook antitrust decision with Kai Ryssdal on the “Make Me Smart” podcast.